A Comparison of the Plant Location Strategies of Foreign and Domestic Manufacturers in the U.S.

Abstract

Several studies have investigated that locational strategies of multinationals across national borders but there have been very few investigations of the locational strategies of multinational and international firms within the borders of a given nation. The influx of foreign manufactures into the U.S. in the seventies and eighties provided a unique opportunity to study their locational strategies within the U.S., which because of its spatial diversity and size, permits identifiable patterns to emerge in the locational strategies of manufacturers.

By investigating the locational strategies of domestic manufacturers also, we were able to make a rare comparison of the locational strategies of the foreign and domestic manufacturers. Further, the study investigated if locational strategies of both domestic and foreign manufacturers changed with time.

Of the many findings, the most notable ones are: market size, as defined by the number of manufacturing establishments in a state, is strongly associated with the locational decisions of foreign manufacturers in the U.S., and secondly, with time, foreign manufactures tend to become more like their domestic counterparts.